As the headline states, Residential Properties in the Southern part of India have seen a rise in prices in the past few years. This spike is supposedly not going to go down for a while and will be increasing due to the disorder in foreign supplies. The cost of basic materials that are used in construction like cement, aluminum, metal, etc. Has grown by 30% to a total of 100% in the previous year itself. Real estate developers are stuck in a fix and struggling to maintain their profits due to the rising cost of gasoline.
Due to the buildup and consolidation within the business industry, an exponential increase in cost is inevitable. A prediction of an increase of 10-15% is expected in the coming future according to Mr. Murali, Chairman and Managing Director of Shriram Properties Ltd. Due to an increase in demand and rise in costs, developers are launching new projects which are set at a premium.
The increase in the cost is affecting the project margin at the end of the day but they differ for each project which relies on the stage of the construction. A prediction has been made that once the geopolitical issues are sorted out, the prices will reduce and fall in place as stated by Mr. Atul Goyal, CFO of the Brigade Group. Demand for housing is about to grow by 10%, which is supported by favorable demographics and urbanization.
This monetary, the prices in real estate are about to see a peak in prices from 6% to a whopping 10% across the top six cities due to a high rise in material costs and relatively favorable demand-supply dynamics. The demand for housing has seen a rise from 33% to 38% within this year, which has surpassed the record during the pre-covid situation. Real estate developers across the country have been seeking out the government and asking them to arrest people who have been increasing the prices of materials like cement, steel, PVC, etc.
Investment in the Real Estate Sector has seen a rapid increase since the pandemic took place and since Real Estate is seen as one of the safest and most stable means of investment. During the last two years, stocks have been performing well and there has been a rise in salaries in the IT sector. Both factors have led to a good flow of investment in the Real Estate sector as it is one of the safest and best means of investment.
